Competitive electricity market will boost Iowa businesses

Iowa lawmakers are always trying to make Iowa more attractive to job creators, lure new companies, and make it easier for those employers currently operating in the state to create jobs.

The cost of electricity is a cost that companies, such as members of the American Free Enterprise Chamber of Commerce (AmFree Chamber), explore when choosing where to locate, or to expand, a facility. Electric utility costs are among the largest operating costs for manufacturers. It is important that Iowa’s utility policy is attractive to new and existing businesses and that our costs are competitive.

In Iowa, large energy users are paying substantially higher than the competitive market rate for electricity. When compared to how other states across the country and Midwest, Iowa’s current system of utility regulation is hurting Iowa’s ability to attract and retain large businesses.

It is time to allow competition in the electricity market for large energy users.

The AmFree Chamber believes that Iowa should offer a market-based option for large users of electricity, while protecting small businesses and entrepreneurs from any rate increases. This proposal is similar to what many other states are offering. This proposal encourages new development in our state without any handout from the government.

Allowing a small segment of Iowa’s energy users the ability to directly purchase electricity from an already-existing exchange brings benefits for our state and for our consumers. The AmFree Chamber believes that we all benefit when businesses are permitted to compete. In the case of public utilities, competition ensures more transparency with ratepayer dollars, drives prudent investment in new energy projects, and showcases Iowa as a place where competition is encouraged, benefiting residents and companies alike — all creating a much more efficient and attractive environment to grow, expand, and lure employers.

This is not a new concept — natural gas is regulated in Iowa, yet competition exists. The electricity market should also be opened to provide competitive power. Current proposals ensure that appropriate regulatory oversight remains in place to protect all ratepayers, while also driving down prices for a growing portion of businesses’ operating expenses through free market competition.

Current proposals will not disrupt transmission, distribution, or billing for energy customers. The proposals hold small commercial and residential customers harmless. In fact, the proposals will likely drive more prudent decision making for rates across the board, driving lower rates for all consumers, including small businesses and residential customers. Prudent decision making helps all energy customers, not just the larger ones.

If the Iowa legislators are truly looking to attract and retain businesses and the jobs they create, they must begin to explore these concepts during the next legislative session.

Jim Kurtenbach holds a Ph.D. in accounting and served as an Iowa state representative from 2003-2007. He currently serves on the board of the American Free Enterprise Chamber of Commerce.